Carrying Charge Market

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Carrying Charge Market

When considering two futures contracts on the same commodity with two different delivery months, a market in which the price for the contract with the later delivery when it equals the price of the contract with earlier delivery plus the cost of storing the underlying commodity for the remaining period of time. For example, suppose the price of a July expiry futures contract on gold is $995 per ounce, and the cost of storing it for a month is $5 per ounce. In a carrying charge market, the price of an August expiry futures contract on gold would be $1,000 per ounce. A carrying charge market is also called a full carry market.

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